Undisclosed income may cover household expenses, while a section 144B reference remains valid when the statutory threshold is crossed.

Undisclosed trading income available to the assessee can justify household expenditure, so a separate addition for low household withdrawals was not warranted and the addition was deleted. The reference under section 144B was valid because the variation between returned income and assessed income exceeded the statutory threshold, so the draft assessment procedure was properly invoked. The commentary notes that the household-expense issue favoured the assessee, while the procedural objection to section 144B failed.

---

---

Issues: (i) Whether the addition made on account of low household withdrawals was sustainable where the assessee had disclosed an undisclosed trading addition; (ii) whether the reference to the Inspecting Assistant Commissioner under section 144B was valid.

Issue (i): Whether the addition made on account of low household withdrawals was sustainable where the assessee had disclosed an undisclosed trading addition.

Analysis: The household expenses were estimated at Rs. 12,000 and the assessee's disclosed withdrawals were found inadequate. However, the assessee was also found to be in possession of outside-book income of Rs. 75,000. That income was available to meet household expenses, making a separate addition for low withdrawals unwarranted.

Conclusion: The addition of Rs. 6,000 was deleted and the issue was decided in favour of the assessee.

Issue (ii): Whether the reference to the Inspecting Assistant Commissioner under section 144B was valid.

Analysis: The returned income was Rs. 259 and the assessed income was Rs. 1,04,710, resulting in a variation exceeding Rs. 1,00,000. The statutory condition for forwarding the draft order was therefore satisfied.

Conclusion: The reference under section 144B was held to be valid and this issue was decided against the assessee.

Final Conclusion: The appeal succeeded only to the extent of deletion of the household-expense addition, while the validity of the section 144B reference was upheld.

Ratio Decidendi: Where undisclosed income is available to cover household expenses, a separate addition for low withdrawals is not justified; a draft assessment procedure under section 144B is attracted when the statutory variation threshold between returned and assessed income is crossed.

---